NMSA 1978, § 7-9-46.1 — 7-9-46.1

Deduction; gross receipts; governmental gross receipts;
sales of services to manufacturers.

# A.

Receipts from selling professional services may be deducted from gross receipts
or from governmental gross receipts if the sale is made to a person engaged in the
business of manufacturing who delivers a nontaxable transaction certificate to the seller
or provides alternative evidence pursuant to Section 7-9-43 NMSA 1978. The
professional services shall be related to the product that the buyer is in the business of
manufacturing.

# B.

The purpose of the deductions provided in this section is to encourage
manufacturing businesses to locate in New Mexico and to reduce the tax burden,
including reducing pyramiding, on the professional services that are purchased by
manufacturing businesses in New Mexico.

# C.

A taxpayer allowed a deduction pursuant to this section shall report the amount
of the deduction separately in a manner required by the department.

# D.

The department shall compile an annual report on the deduction provided by this
section that shall include the number of taxpayers that claimed the deduction, the
aggregate amount of deductions claimed and any other information necessary to
evaluate the effectiveness of the deduction. The department shall compile and present
the report to the revenue stabilization and tax policy committee and the legislative
finance committee with an analysis of the cost of the deduction and whether the
deduction is performing the purpose for which it was created.

# E.

As used in this section:
(1) "accounting services" means the systematic and comprehensive recording
of financial transactions pertaining to a business entity and the process of summarizing,
analyzing and reporting these transactions to oversight agencies or tax collection
entities, including certified public auditing, attest services and preparing financial
statements, bookkeeping, tax return preparation, advice and consulting and, where
applicable, representing taxpayers before tax collection agencies. "Accounting
services" does not include, except as provided with respect to financial management
services, investment advice, wealth management advice or consulting or any tax return
preparation, advice, counseling or representation for individuals, regardless of whether
those individuals are owners of pass-through entities, such as partnerships, limited
liability companies or S corporations;
(2) "architectural services" means services related to the art and science of
designing and building structures for human habitation or use and includes planning,
providing preliminary studies, designs, specifications and working drawings and
providing for general administration of construction contracts;
(3) "engineering services" means consultation, the production of a creative
work, investigation, evaluation, planning and design, the performance of studies and
reviewing planning documents when performed by, or under the supervision of, a
licensed engineer, including the design, development and testing of mechanical,
electrical, hydraulic, chemical, pneumatic or thermal machinery or equipment, industrial
or commercial work systems or processes and military equipment. "Engineering
services" does not include medical or medical laboratory services, any engineering
performed in connection with a construction service or the design and installation of
computer or computer network infrastructure;
(4) "information technology services" means separately stated services for
installing and maintaining a business's computers and computer network, including
performing computer network design; installing, repairing, maintaining or restoring
computer networks, hardware or software; and performing custom software
programming or making custom modifications to existing software programming.
"Information technology services" does not include:
(a) software maintenance and update agreements, unless made in
conjunction with custom programming;
(b) computers, servers, chilling equipment and pre-programmed software;
(c) data processing services or the processing or storage of information to
compile and produce records of transactions for retrieval or use, including data entry,
data retrieval, data searches and information compilation; or
(d) access to telecommunications or internet;
(5) "legal services" means services performed by a licensed attorney or under
the supervision of a licensed attorney for a client, regardless of the attorney's form of
business entity or whether the services are prepaid, including legal representation
before courts or administrative agencies; drafting legal documents, such as contracts or
patent applications; legal research; advising and counseling; arbitration; mediation; and
notary public and other ancillary legal services performed for a client in conjunction with
and under the supervision of a licensed attorney. "Legal services" does not include
lobbying or government relations services, title insurance agent services, licensing or
selling legal software or legal document templates, insurance investigation services or
any legal representation involving financial crimes or tax evasion in New Mexico; and
(6) "professional services" means accounting services, architectural services,
engineering services, information technology services and legal services.